The Organization for Economic Cooperation and Development (OECD) just released a useful new study entitledPolicy Complements to the Strengthening of IPRs in Developing Countries. It significantly undermines the claims of "public interest" advocates who wail that they just know intuitively that improved legal protection for intellectual property rights (IPRs) are merely one more means through which developed countries oppress developing countries. While such claims often sound lofty and compassionate, very ugly prejudices often lurk beneath them. Fortunately, by actually studying real data, the OECD found that such claims are wrong as applied to actual developing countries: "[T]the results point to a tendency for IPR reform to deliver positive economic results."

In the National Law Journal, Dan Brenner's piece, Apps decision: no big deal, provides a thoughtful debunking of the hype that surrounded this summer's decision by the Librarian of Congress to exempt the "jailbreaking" of iPhones from the anti-circumvention provisions of 17 U.S.C. § 1201(a). I tried to make similar points back when the ruling was first issued, but I think that Brenner has better explained the underlying issues.

After reviewing the commentary on Judge Stanton's summary judgment ruling in Viacom v. YouTube, I note the lack of substantive defenses of its legal merits. See Viacom Int'l, Inc. v. YouTube, Inc., 2010 U.S. Dist. LEXIS 62829 (S.D.N.Y. 2010) (the "Viacom Opinion"). This Opinion held that because the original founders of YouTube had responded to takedown notices, they were protected from civil liability for copyright infringement by § 512(c) of the Digital Millennium Copyright Act (the "DMCA")—even if they were also intentionally inducing mass copyright piracy like the Defendants in MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005).

But this Opinion will be reversed on appeal for at least two reasons. First, no judge can legally find something so daft as a civil safe-harbor for criminal racketeering lurking in the unspoken implications of the "tenor" of excerpts of legislative history. Second, no judge can legally hold that the DMCA adopted terms that judges used to convey the lack of any knowledge requirement in order to tell judges to impose an "item-specific" knowledge requirement. As singer Katy Perry might put it, unless the DMCA was "a [law] bipolar," it did not use "in" to mean "out" or "up" to mean "down...."

Consequently, the Viacom Opinion is not really a huge win for those who want foreign corporations to be able profit by intentionally inducing mass piracy. Indeed, apart from the usual applause from the usual suspect—and a switch-of-sides at Slate—no one seems to be praising or even defending the substance of Judge' Stanton's legal analysis. And with good reason—it is indefensible.

But those who get their copyright news from the Internet might be shocked that the record labels have just dared to appeal Judge Gertner's allegedly brilliant legal analysis. After all, Public Knowledge hailed Judge Gertner's reasoning as a triumph of common sense. And at the blog TechDirt, Mike Masnick gushed, "Gertner knows this is going to be appealed, and she put a lot of effort into making the case for why this ruling was excessive, in hopes of having her reasoning help carry the later appeals."

Such fawning is silly. Judge Gertner's reasoning is far too profoundly flawed to have much chance of surviving appellate review. I will thus note three defects in Judge Gertner's analysis that should prove fatal. None is merely technical; all involve basic disregard for settled law, the facts, or reality itself.

Recently, I used the word "Wow" in the title of a post because a hearing held by the Senate Committee on the Judiciary produced bipartisan calls for broad voluntary cooperation to ensure that Internet commerce--like real-world American Commerce--abides by the rule of law, including those rules of law that prohibit copyright infringement and trademark counterfeiting.

What inspired me about those calls to restore the rule of law was not that they were substantively controversial. For example, the World Bank estimates that intangible capital accounts for 80% of the wealth in the developed world, and that 57% of that intangible capital arises from the rule of law--including all those government-granted monopoly rights that most call "private-property rights" SeeThe World Bank, Where Is the Wealth of Nations? 20, 87 (2006). (Education was the next-largest contributor; it accounted for 36% of intangible capital.) In effect, the World Bank thus concluded that the rule of law accounts for almost 50% of American wealth. Obviously, an Internet that fails to preserve rule of law will thus become a job-killing economic catastrophe for the United States.

TechDirt Errs Again: Copyrights Are the Definition of "Market Forces" in Action.

I just read the latest Deep Thought from the editor of the blog TechDirt, Mike Masnick, who must be the only person, other than Her Majesty Queen Elizabeth II, who often uses the royal "we" when expressing a personal opinion. In Pushing for More Stringent Copyright Laws Is the Opposite of Allowing "Market Forces" to Act, Masnick rants that granting legally protected private exclusive rights, (a.k.a., "private property rights"), to private producers of socially valuable resources like expressive works will thwart what Masnick calls "market forces":

[I]t's flat out wrong to say that copyright (or patents, for that matter) are about "allowing market forces" to act. By definition, copyright and patent laws are the opposite of allowing market forces. It's the government stepping up and providing monopoly rights because they believe (rightly or wrongly) that basic market forces don't work in those areas and, thus, the government needs to step in and "correct" some sort of imbalance.

This is all--as Masnick might put it--"flat out wrong...." Economists and the economically literate know that if we want "market forces" to encourage the consumer-driven private production of any resource (including expressive works) then we must grant exclusive rights to private producers of that socially valuable resource. In other words, property rights---government-granted, legally protected exclusive rights--are required to use "market forces" to encourage the production of any resource.

"Again?" That was my reaction when I read the Opinion and Order issued last night by Judge Louis Stanton in Viacom v. YouTube. How ironic that the original YouTube--the "video Grokster" will now force the re-litigation of a minor variation of the same question answered unanimously by the Supreme Court in MGM Studios, Inc. v. Grokster, Ltd.

But so be it. I've seen this movie already. I think I know how its sequel ends.

In MGM Studios, Inc. v. Grokster, Ltd., a federal district judge held that a federal law--in that case, the Supreme Court's 5-4 decision in Universal City Studios v. Sony--created a "safe harbor" that protected from civil liability even corporations that intended to build Internet businesses based on mass piracy by using unprotected consumers as human shields against copyright enforcement so that mass piracy could become "start up capital for their product."

Personally, I never doubted that the district-court decision in Grokster would be overturned. It was absurd. Under then-existing law, corporations that intended to encourage or dupe even one consumer into infringing copyrights were committing federal crimes. See, e.g., 18 U.S.C. secs. 2, 241, 307, 2319. And corporations that intended to induce mass piracy were committing far more serious crimes by operating criminal "racketeering enterprises" within the meaning of the Racketeer-Influenced and Corrupt Organizations Act (RICO). See id. at secs. 1961-68.

Consequently, even though the meaning of the 5-4 majority opinion in Sony was deliberately obscure, one point seemed inarguable: it made no sense to imagine that Sony could have been intended to provide protection from civil liability to potential criminals or criminal racketeering enterprises. Predictably, in Grokster, every single Justice of the United States Supreme Court agreed that Sony had not created a "safe harbor" for any sort of potentially criminal conduct.

I would also suggest that the Court's unanimous decision in Grokster should have conveyed to federal district judges a message somewhat broader than the Court's actual holding. That message was simple: It is highly improbable that any federal law will ever create some "safe harbor" against civil liability for copyright infringement that protects any potentially criminal conduct. That result makes no sense whatsoever.

Alas, in Viacom Int'l, Inc. v. YouTube, Inc., another federal district judge has now held that another federal law--in this case, the hosting-site "safe harbor" codified in Section 512(c) of the Copyright Act--has created a "safe harbor" that protects from civil liability even corporations that intended to build Internet businesses based on mass piracy by using unprotected consumers as human shields to deter the enforcement of the federal civil rights of artists and mass piracy as "start up capital for their product."

Fortunately, this new decision is even less defensible than the district-court decision in Grokster that inspired the Grokster Defendants to disembowel themselves, (see n.1), when their case reached the Supreme Court. The 5-4 majority opinion in Sony was deliberately vague about the meaning of the rule of law it created. Section 512(c) is not--it is quite specific. For example, it expressly denies protections to any hosting site operator who "is aware of facts and circumstances from which infringing activity is apparent." 17 U.S.C. sec. 512(c)(a)(ii). As a result, in Viacom v. YouTube, Judge Stanton had to conclude that a hosting-site operator can actually know about and "welcome" "ubiquitous" mass piracy, yet be unaware of any "facts and circumstances from which infringing activity is apparent." The English language itself precludes that conclusion--as do all known principles of statutory interpretation.

Judge Stanton needs to certify his most implausible conclusions for immediate interlocutory review. He has accused Congress of speaking in tongues in order to create a civil "safe harbor" that protects even online racketeering enterprises that intend to endanger consumers so mass piracy can act as "start up capital for their products."

That is an extremely serious charge. If an unelected federal judge directs such dire accusations of misfeasance and malfeasance at the elected Members of the other two coordinate Branches of the federal government, immediate appellate review should follow as a matter of course.